Dropping vacation time - legal aspects of company vacation policies - Brief Article

Nation's Business, Sept, 1995 by Laura M. Litvan

I operate a 45-employee nursery that sells plants to hotel operators, retailers, and other clients. Recently, sales dropped off. To cut costs, we stopped providing workers a week of paid vacation a year. Even though we are nonunion, I now wonder if this poses legal problems. What, if any, paid or unpaid vacation benefits must I offer employees?

D.M., La Puente, Calif.

Federal law doesn't require employers to provide paid vacation time, and states don't either. But under the federal Family and Medical Leave Act of 1993 and a similar state law in California, if your firm grows to 50 employees or more, you must offer workers up to 12 weeks of unpaid time off annually to care for a child after a birth or an adoption, to look after an ailing family member, or to nurse a serious medical condition of their own.

So while the short answer to your question appears to be "none," as with most personnel matters the issue is a tad more complicated.

A deputy commissioner of the California Labor Commissioner's office says his agency has administrative authority to require "fair and equitable" employment practices, and eliminating vacation benefits--particularly if the time has already been accrued--could raise eyebrows there. The agency can seek a court order directing a company to make good on its promises to workers.

Also, in a phone conversation with us you mentioned that, despite your general revocation of paid vacation time, you let an executive take a two-week paid vacation recently. While employers may distinguish between executives and the rank and file in their vacation-benefits policies, employment-law attorneys generally advise against doing this informally.

Sharon Grodin, a partner in the Emeryville, Calif., firm of Corbett and Kane, advises that you develop a written vacation-benefits policy for your company.

Grodin says that by informally giving vacation time to selected workers, you increase the likelihood of a jobbias lawsuit. Some employees may conclude that your selection was linked to race, sex, or some other discriminatory factor, she says.

Grodin adds that if you don't have a written policy, anyone allowed to take off under mitigating circumstances could think they are entitled to do so again, even if that isn't your intent.

Finally, although only you know what benefits you can afford to offer, you could create a deep rift with workers by eliminating a benefit. Frances Morton, a senior consultant with Alexander and Alexander Consulting Group in Lyndhurst, N.J., says, "Employees can perceive that as being a fundamental blow to their relationship with the employer, and they won't forget it."